Traditionally, paper checks have been used for payment in lieu of cash. Once tendered, these paper checks enter a distribution stream that routes the paper checks back to the issuing banks for payment. With the emergence of the Internet, the use of paper checks is diminishing.
The Check Clearing for the 21st Century Act (or Check 21 Act), which went into effect in October of 2004, allows the recipient of a paper check to create a digital version, thereby eliminating the need for further handling of the physical check. This process is sometimes referred to as truncation, wherein a paper check is scanned (front and back), and the scanned digital check image file is used in place of the paper check during processing and payment.